Evaluate Two Macroeconomic Objectives the Government in Your Home Country Aims to Achieve and How Effective Is the Government in Achieving Them?

Firstly Inflation is an upward movement in the average level of prices. Its opposite is deflation, a downward movement in the average level of prices. The boundary between inflation and deflation is price stability. Inflation can either be negative or positive; it could mean making products more expensive. There are a number of effects of inflation that can

The term `inflation' defines a situation in which prices are rising and the value of money is falling. The cause of inflation is due to too much money in the economy ben printed and the high rise in demand. too few goods. An inflationary spiral tends to set in. Increasing prices produce a demand for higher wages: higher wages mean that goods cost more to produce: prices must go up again to pay for the wage increases.

The United States inflation rates are a problem, if the government were to control them then the United States would flourish from a “B+” economy to a “A” economy. In the United States (September, 2015) consumer prices went up 1.5%,

Inflation is a general increase in the prices of all goods and services. Inflation occurs when the average level of prices in the economy increases over time. Even as overall prices are increasing, particular relative prices will change. The US Federal Reserve attempts to control and reduce inflation. Central banks focus is on strictly controlling inflation, protecting financial assets, and keeping labor markets strictly in check. Central Banks hold inflation more important than unemployment. Central Banks believe the only long-run impact of monetary policy is on the rate of inflation. They believe free-market forces in the real economy determine real output, employment, and productivity. To attain the targeted inflation rate, central banks influence credit creation and hence spending by frequently adjusting interest rates.

The nation's monetary policy is set up by the Federal Reserve in order to support the aims and objectives of better employment, stable prices and a suitable and logical long term interest rates. One of the main challenges that are faced by policy makers is the stress among the aims and objectives that can occur in the short term and the fact that information regarding the economy becomes delayed and can be inaccurate (Monetary).

Most people don’t understand Economic growth or what takes place in the economy with regard to inflation, unemployment, or interest rates. These things are all regulated by the central bank called the Federal Reserve System. The tope covered in this paper is the monetary policy which is the policy that decides if unemployment, interest, and inflation decreases or increases. The Monetary policy decides what price a person pays for an item at the store, how much interest a person will get charged on a loan for a car. This is something most people consider, most just look for the best price point or look where their money can go the farthest.

Inflation hinders economic growth. For example, when inflation is high, goods and services cost more, and people tend to spend less. High inflation also causes less long-term planning associated with spending money, such as home building and investing. Businesses are affected in the same manner. When inflation goes up, and down inconsistently, people become weary of spending, exacerbating their fears that they won’t be able to pay their bills. Long-term interests also go up, due to high inflation. The cost added to long-term interest rates compensates for the risk associated with inflation. Additional costs on interest rates make people less willing to take on a loan. When, the demand for goods and services is low, then the supply of goods up, the production of those goods has to decrease, giving rise to

It widely recognized that the monetary policy within a country should be primarily concerned with the pursuit of price stability. However, it is still not clear how this objective can be achieved most effectively. This debate remains unsettled, but an increasing number of countries have adopted inflation targeting as their monetary policy framework. (Dr E J van der Merwe, 2002) This topic of Inflation targeting is a subject which immediately conjures different perceptions from different people. Many feel that low inflation should be a main aim of monetary policy, while others (such as trade union activists) believe that a higher growth rate to stimulate jobs should be the main concern.

Conflict can occur between economic growth and inflation which in turn leads to conflict between unemployment and inflation. When an economy grows too quickly pressure on inflation rates increase. Australia’s current inflation rate is 1.3% (Economy Snapshot RBA 2016) The current acceptable rate of inflation nationally is between 1% to 3%. Inflation is defined as the sustained rise in the general level of prices in a market. For prices to be stable we should aim for 0% inflation rate. Introducing a fluid monetary policy which concentrates on identifying the fundamental causes of inflation rate rises in an economy, will assist in keeping inflation under control. For instance, if there were to be an excessive increase in demand for goods and services, demand being the primary factor for a rise in inflation, on a government level it should say to us, we need to identify the causes and commence action as quickly as possible to decrease the level of demand to ensure stability of the inflation

Inflation presents a problem for the FED achieving it’s goal of price stability. Inflation is unavoidable as far as the natural progression of an economy is concerned. Supply and demand also affect inflation. While the FED cannot control supply and demand of a product, I would suggest that they try to control price stability by creating regulations of what a company can charge related to the supply and value of a product. A high unemployment rate negatively affects the FED’s goal of a high employment rate. The employment rate is

Inflation and interest rates are often synonymous in the fact that one impacts the other. Interest rates in the United States are determined based on three variables; time value of money, reimbursement risk and power of inflation (What’s the Relationship Between Inflation and Interest Rates?, 2009). Essentially, the higher the inflation rate, the higher the interest rate. With inflation in the United States remaining low, bank interest rates will keep currencies at a constant with minimal fluctuation in value. This has both negative and positive effects on the economy. Borrowers (i.e. homebuyers, students needing loans, etc.) benefit from this; whereas the investors are not making what they did 20 years ago when interest rates were profitable (Appendix

Inflation; ‘a situation in which prices rise in order to keep up with increased production costs… result[ing] [in] the purchasing power of money fall[ing]’ (Collin:101) is quickly becoming a problem for the government of the United Kingdom in these post-recession years. The economic recovery, essential to the wellbeing of the British economy, may be in jeopardy as inflation continues to rise, reducing the purchasing power of the public. This, in turn, reduces demand for goods and services, and could potentially plummet the UK back into recession. This essay discusses the causes of inflation, policy options available to the UK government and the Bank of England (the central bank of the UK responsible for monetary policy), and the effects

Since the global financial crisis of 2008, the UK government has been implementing various policies to combat the recession and stimulate economic growth. This essay will look at how effective the fiscal and monetary policies used since the crisis are in achieving the four-macro economic objectives. In addition, I will provide my input on the best way the UK government can carry out these policies.

Inflation is blazing subject that delays the economic development of the country. It is becoming extra hectic to economists, politicians and even people also. Factors on both demand and supply effect the inflation. So the stabilization strategies ought to consequently focus on both demand manipulation as well as

Unemployment and inflation are factors that have negative effects on the performance of the economy as a whole. Therefore, policies to achieve low and stable price inflation, a high and stable level of employment are big macroeconomics issues of our time. This essay focuses on discussing the role of government policy on reducing unemployment and inflation in relation to Keynesian and Monetarist approaches, including examples of impacts of expansionary fiscal and monetary policies on New Zealand economy.